252 / 2021
Quote of the day
"The winds of grace are always blowing, but you have to raise the sail."
- Ramakrishna Paramahamsa
First issue of the month, year and decade for Samhita. That too after a tumultuous 2020 that has left us all shaken. I am tempted to look at only pleasant things in life but can I close my eyes to something happening within my precincts, my backyard ? There is so much of pent up frustration, so much of angst, so much of indignation amongst the professionals dealing with compliances (read Company Secretaries & Chartered Accountants) – for their own self as well as for the clients they are serving (read MSMEs & Startups). There is enough and more said about the non-functioning of the MCA portal, technical glitches leading to late hours of working for the professionals, loss of precious manhours and heavy penalties / additional fee for the corporates beyond 31st December, 2020. While corporates would do well to put their compliance systems in place that ensure correct and timely flow of information to professionals who ensure filings for them, can we request the Ministry to also ensure a glitch-free portal please that fails as we come closer to the due date, completely crashes on the last day but surprisingly starts functioning perfectly from 1 minute past midnight ?? I do not want to dwell more on this since the problem is clear – at least to people on this side i.e. professionals & corporates. It has been extensively represented too directly, through chambers, institutes, online and offline media (just google Extend CFSS 2020 & LLP Settlement Scheme). The question is – is it clear to the one to whom it matters ? Ministry of Corporate Affairs ? Do they recognise it as a problem to be solved ? Does not seem to me considering the inadequate response or lack of it received so far.
I have some perspectives to offer from two very mundane domestic chores. It matters from what distance you see something. How close or how far ? Today as Jaya was standing outside the bathroom, she noticed that the tiles below the mirror were stained with dirt and watermarks. When she pointed out to the maid, she argued that she cleans it everyday. Jaya asked her to step out of the room, stand at a distance and watch for sometime from different angles. The maid sheepishly admitted that yes, it is not clean enough and indeed she was not cleaning it. Jaya realised, from a close distance everything looked perfect but as she got farther, the actual stains started showing up. She learnt that if one becomes too involved with some activity, it is difficult to appreciate if it is carried out well enough or not. It pays to step aside, disengage for a while and watch from a distance to understand if anything is broken and if it requires some fixing. But once it is clear, it must be handled with a sense of purpose, with a sense of urgency before the issue gets out of hand.
A similar lesson I learnt from the everyday chore of plucking jasmine flowers from my garden. As winter steps in, the number of flowers reduce. I bend to my right, left, forward, backward and all angles that my not-so-flexible body permits me in different postures, to reach out to the creeper that is leaning more towards the neighbour’s plot in search of the sun. I feel disappointed that there aren’t enough flowers in the basket but each time I step back or sidewards and watch from a distance, I see the gentle sunrays falling on the white petals. And lo, a flower seems to appear from nowhere, from the same branch which had nothing on it a little while ago. A whole new bunch of jasmines seem to taunt me to find them. I feel stupid wondering how on earth did I miss them earlier, when I was so close to them, when they were literally under my nose. But I soon realise, both the sight and scent of the fresh jasmine is better experienced from a distance and not when I am too close. It pays to detach yourself completely from certain situations, step aside, stand apart, watch it, observe it keenly, take a bird’s eyeview and then discover the obvious unfold.
Now, which of the above will the MCA adopt ?
Will it develop a keen hawk-like eyes of Jaya, the homemaker to find the stains proactively ? or
Will it continue to bury its head in the sand, like the proverbial Ostrich ?
Will it continue to be like the stubborn maid who refuses to recognise the stains until pointed out ? or
Will it accept that something is broken and requires to be fixed urgently ?
Will it stand close to the creeper and continue to look for the fragrant jasmines randomly ? or
Will it step back, find the right position and watch from a distance to spot the elusive flowers ?
Will it realise that it needs to shift its stand ?
Perhaps, the other side (represented by professionals and corporates) needs to adopt a similar strategy too. Then and only then the atmosphere of mistrust and angst will die down, opening up channels of communication and purposeful action. Ease of Doing Business calls for this and more, not just climbing up a few rankings for World Bank !
Starting with this 252nd issue of Samhita, Balaji, our English language expert has come up with 2 simple tips for business communication using emails. I particularly liked his take on how the ‘tone of written communication’ changes by just changing the position of the commonly used word ‘please’. May I request you to please read ‘Let’s excel in English’ ? Coming to think of it, should the ‘tone of our representations to the MCA’ change as well ? Apart from this, please spare time for an informative article by Mr. Sreenivasan Narasimhan, Associate regarding certain relaxations in export regulations introduced by RBI – welcome ones that have addressed the ground realities. MCA, as usual has the highest score with its circulars (that are confusing and bound to lead to a spate of further clarifications), followed by other regulators – RBI, SEBI, IBBI, GST. For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.
Reminders for Payments & Returns
Export Facilitation measures by RBI
To help importers and exporters deal with the challenges posed by pandemic as well as enhance India’s export competitiveness in the global market, the RBI through its Statement on Development and Regulatory Policy (part of Bi-monthly Monetary Policy Statement) has brought in certain changes to Export- Import transaction processing vide notification dated 04.12.2020. Some of the earlier conditions have been relaxed bearing in mind the practical difficulties faced by the exporters.
Sreenivasan Narasimhan, Associate, has summarised the changes brought about by the Circular through a brief article with a read time of 5 minutes.
No restrictions on opening of current account as stipulated by regulators
Vide Circular dated 06.01.2020, RBI had issued revised guidelines for opening current account as follows:
No current account where customer is availing credit facilities (CC/OD) from banking System
Threshold of exposure for current accounts opened under Exposure from Banking system
Vide Circular dated 14.12.2020, RBI has exempted certain current accounts which are required to be opened as mandated by various Acts or as stipulated by regulators. The current accounts so exempted are:
Accounts for real estate projects mandated under of the Real Estate (Regulation and Development) Act
Nodal or escrow accounts for specific activities as permitted by Department of Payments and Settlement Systems (DPSS), Reserve Bank of India under Payment and Settlement Systems Act, 2007
Accounts for settlement of dues related to debit /ATM /credit card, issuers/acquirers
Accounts under FEMA, 1999
Accounts for the purpose of IPO / NFO /FPO/ share buyback /dividend payment / issuance of commercial papers/allotment of debentures/gratuity, etc. mandated by respective statutes or regulators
Accounts for payment of taxes, duties, statutory dues, etc. opened with banks authorized to collect the same, for borrowers of such banks
Accounts of White Label ATM Operators and their agents for sourcing of currency
MCA Notifications and Updates
GMs through VC / OAVM - Extended
Considering the difficulties in conducting physical General Meetings during the COVID-19 pandemic, MCA had allowed companies to conduct General Meetings through Video Conferencing (VC) / Other Audio Visual Means (OAVM), subject to fulfilment of certain requirements. The same has now been extended, allowing companies to conduct EGM through VC/OAVM up to 30.06.2021 and AGMs due to be held in the year 2020 or 2021, through VC/OAVM on or before 31.12.2021.
However this Circular does not grant any extension for holding AGMs that were due in the year 2020.
VC Board Meetings for all agendas – Extended upto 30.06.2021
Board meetings for all agendas including approval of the annual financial statements, Board’s report, prospectus, approval of matter relating to amalgamation, merger, demerger, acquisition and takeover and Audit Committee Meetings for consideration of financial statement (generally called restricted items), can now be held though VC / OAVM up to 30.06.2021.
Awareness campaigns for COVID-19 vaccination programme – Valid CSR expense
MCA had clarified in the Circular dated 23.03.2020 that spending of CSR Fund for COVID-19 is an eligible CSR activity. It has been further clarified vide Circular dated 13.01.2021 that spending of CSR Funds for carrying out awareness campaigns / programmes or public outreach campaigns on COVID-19 vaccination programme is an eligible CSR Activity under Schedule VII.
All companies that have filed forms under the Companies Fresh Start Scheme, 2020, were required to file a form with the list of forms filed under CFSS, 2020 to obtain an Immunity Certificate for the forms so filed. The said form i.e. Form CFSS 2020 is available for filing w.e.f. 16.01.2021 and must be filed within 30 days of being notified.
Retention of documents of CIRP by IP
Vide Circular dated 06.01.2021, IBBI has directed that IP is required to preserve documents and records of any Corporate Insolvency Resolution Proceedings undertaken by him:
In electronic form - for atleast 8 years from date of completion of CIRP or any proceedings initiated under CIRP
Physical copy – for atleast 3 years from date of completion of CIRP or any proceedings initiated under CIRP
The IP is required to ensure the documents are preserved in a secured place (with Information Utility) and is not accessible by any unauthorised person.
Amendment to SEBI (AIF) Regulation, 2012
Vide Circular dated 08.01.2021, certain Alternate Investment Funds (AIFs) have been exempted from the applicability of clause (i) and (ii) of the first proviso to Regulation 20(6), subject to certain conditions including each investor furnishing a waiver to the AIF in respect of compliance with these clauses. Under these clauses the Manager of AIF is required to constitute an Investment Committee for approving the investment decisions, for which the members shall be equally responsible along with the Manager including compliance with the Regulations, terms of Placement Memorandum, investor agreement and any other fund document.
The format for the said waiver has also been notified in the circular.
Extended due date – Form GSTR-9 & 9C
CBIC has extended the due date for filing of Annual Return in Form GSTR-9 and Annual Reconciliation Statement in Form GSTR- 9C for the financial year 2019-2020 from 31.12.2020 to 28.02.2021.
CGST (Amendment) Rules, 2021
CBIC has notified the Central Goods and Services Tax (Amendment) Rules, 2021 to further amend the Central Goods and Services Tax Rules, 2017.
a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under Section 37 in FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two months;
a registered person, required to furnish return for every quarter under the proviso to sub-section (1) of section 39, shall not be allowed to furnish the details of outward supplies of goods or services or both under Section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period;
a registered person, who is restricted from using the amount available in electronic credit ledger to discharge his liability towards tax in excess of ninety-nine per cent of such tax liability under Rule 86B, shall not be allowed to furnish the details of outward supplies of goods or services or both under Section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period.